Question

Gato Inc. had the following inventory situations to consider at January 31, its year-end.
(a) Goods held on consignment for Steele Corp. since December 12.
(b) Goods shipped on consignment to Logan Holdings Inc. on January 5.
(c) Goods shipped to a customer, FOB destination, on January 29 that are still in transit.
(d) Goods shipped to a customer, FOB shipping point, on January 29 that are still in transit.
(e) Goods purchased FOB destination from a supplier on January 25 that are still in transit.
(f) Goods purchased FOB shipping point from a supplier on January 25 that are still in transit.
(g) Office supplies on hand at January 31.
Identify which of the preceding items should be included in inventory. If the item should not be included in inventory, state in what account, if any, it should have been recorded.

Answer 1

Answer:

The answers are:

Explanation:

A) Not included in merchandise inventory, belongs to the consignor

B) Included in merchandise inventory

C) Included in merchandise inventory

D) Not included in merchandise inventory , they were already sold so they should be included as COGS

E) Not included in merchandise inventory,   belongs to the seller

F) Included in merchandise inventory

G) Not included in merchandise inventory , office supplies on hand are usually considered minor expenses